delivered the opinion of the court:
Plaintiff filed a complaint against defendants for tortious interference with contract, breach of contract against defendant Phil Terese Transportation, Ltd. (Phil Terese Transportation), breach of contract against the individual defendants under a piercing-the-corporate-veil theory, and common-law and statutory fraud. Following a bench trial, the trial court first held that plaintiff did not have standing to bring its claim against defendants. Stating that its ruling concerning standing might be erroneous, however, the trial court then ruled on the issues raised in plaintiffs complaint. The trial court held that plaintiff had not proved breach of a valid contract or damages, as required to recover on its claim for tortious interference with contract. The trial court further held that Phil Terese Transportation’s corporate veil could be pierced as to defendants Michael Apa and Anthony Apa, but not as to defendant Frank DiLeonardi. Nonetheless, with regard to the breach of contract claims against Phil Terese Transportation and the Apas, the trial court held that plaintiff had not proved its damages. Finally, the trial court held that plaintiff had not proved a cause of action for fraud. The trial court, therefore, entered a verdict in favor of defendants.
Plaintiff now timely appeals the trial court’s finding that plaintiff lacked standing to pursue its claims, that plaintiff had not proved damages on its breach of contract claims, that Phil Terese Transportation’s corporate veil should not be pierced as to Frank DiLeonardi, and that plaintiff had not proved that defendants tortiously interfered with plaintiffs contract. Defendants cross-appeal the trial court’s finding that Phil Terese Transportation’s corporate veil could be pierced as to Michael Apa and Anthony Apa.
The facts giving rise to plaintiffs complaint are as follows. Defendant Frank DiLeonardi was the sole shareholder of AMA Transport, a trucking company incorporated in 1989. DiLeonardi formed AMA Transport from the assets of AMA Warehousing, which DiLeonardi had purchased at a public auction after AMA Warehousing had made an assignment for the benefit of creditors. Codefendants Michael Apa and Anthony Apa had formed AMA Warehousing early in the 1980s. DiLeonardi did not have an ownership interest in AMA Warehousing, and neither of the Apas had an ownership interest in AMA Transport, although they both worked for the company.
On October 26, 1990, plaintiff entered into a five-year contract with AMA Transport for the lease of 25 trucks. Isaac Freeman, one of plaintiff’s sales representatives, testified that although plaintiff’s invoices provided for payment within 21 days, AMA Transport had always paid the invoices in 30 to 45 days. Freeman testified that around the beginning of 1994, AMA Transport began paying its invoices from six to nine weeks behind.
At trial, DiLeonardi testified that in 1994, AMA Transport encountered financial difficulties. It had been treating its truck drivers as independent contractors, but the Illinois Department of Employment Security held that the drivers were employees and assessed a $16,000 fine against the company. DiLeonardi was afraid that the Internal Revenue Service would make a similar finding and also would assess a large fine against the company, so he decided to file for bankruptcy on behalf of AMA Transport. On January 4, 1994, Michael Apa and Anthony Apa formed defendant Phil Terese Transportation, Ltd., which operated from the same address and used the same telephone number as AMA Transport. Thereafter, on May 2, 1994, AMA Transport and Phil Terese Transportation entered into an asset purchase agreement pursuant to which AMA Transport sold its name, its carrying authority and all of its cartage contracts to Phil Terese Transportation for $26,000. AMA Transport, however, never received the $26,000 from Phil Terese Transportation.
Following the asset purchase agreement, AMA Transport continued to operate using plaintiffs trucks. Phil Terese Transportation also began to operate using some of plaintiffs trucks. Freeman testified that, in the first or second quarter of 1994, he thought that AMA Transport was taking over Phil Terese Transportation. In the third quarter of 1994, he learned that Phil Terese Transportation was taking over AMA Transport because he was directed to pick up checks from Anthony Apa instead of Frank DiLeonardi. In addition, the checks said “Phil Terese Transportation,” with the name “AMA Transport” in parentheses. Freeman was told that AMA Transport was going to be switched over to Phil Terese Transportation, and that AMA Transport would eventually cease doing business.
Freeman also testified that on or around July 1, 1994, plaintiff sold some trucks to AMA Transport for $66,000. AMA Transport put $6,000 down and executed a note for the remaining $60,000. DiLeonardi signed the note for AMA Transport, then suggested that the note be put under Phil Terese Transportation’s name because AMA Transport would be gone before the end of the payment period. Accordingly, the document was changed and put in Phil Terese Transportation’s name. On or about April 22, 1995, plaintiff entered into a truck lease with Phil Terese Transportation. On April 25, 1995, DiLeonardi signed AMA Transport’s petition for bankruptcy, which was filed on May 4, 1995.
Bruce Dandrew, plaintiffs president, testified that he took over management of AMA Transport’s account when its accounts receivable were around $150,000. Dandrew had a meeting in late 1994 with DiLeonardi and the Apas concerning the delinquent account. Defendants told Dandrew that they had a tax problem and that they were going to transfer AMA Transport’s operations to Phil Terese Transportation and bankrupt AMA Transport. Dandrew said that he did not repossess plaintiffs vehicles at that time because he wanted to give defendants an opportunity to get some financing. When AMA Transport’s accounts receivable still did not drop, Dandrew had a second meeting with defendants. Defendants told Dandrew that the bank had turned down their request for financing, so Dandrew suggested putting the accounts receivable into a loan that defendants could pay off in six months to a year. Defendants were agreeable to the concept of a loan but wanted around five years to pay off the loan. After defendants refused to execute a short-term loan, Dandrew demanded repossession of plaintiffs vehicles on May 6, 1995. Following plaintiffs repossession of its trucks, Phil Terese Transportation issued notice that it had assigned its assets for the benefit of creditors on May 12, 1995.
At trial, plaintiff offered into evidence as damages the open and unpaid invoices for AMA Transport and Phil Terese Transportation. James Lynch, plaintiffs comptroller, testified that the open invoices totaled $134,470.84, and the invoices which had been written off as bad debt totaled $105,076.56. Plaintiff had repossessed the trucks that were the subject of the invoices, but plaintiff did not credit defendants’ invoices for any amounts received from the resale or lease of the trucks. Further, Lynch testified that the balance due on the $60,000 note was $36,443.10, plus 20% per annum interest, although this amount did not reflect any credit for the resale or lease of the trucks that were the subject of the note. Finally, Dandrew testified that plaintiff sent defendants an invoice in the compiled amount of $100,000 for liquidated damages as a result of defendants’ breach of the lease contract.
On the first day of trial, defendants moved for leave to file affirmative defenses of lack of standing and failure to mitigate damages. Defendants claimed that plaintiff lacked standing as to its claims for tortious interference with contract, breach of contract against the individual defendants, common-law fraud, and statutory fraud, because those claims could only be brought by the trustee of AMA Transport’s bankruptcy estate or by Phil Terese Transportation’s assignee for the benefit of creditors. Defendants also claimed that plaintiff had failed to mitigate its damages as required by state law. The trial court denied defendants’ motion but held that it was plaintiffs burden to prove standing as part of its prima facie case. The court stated that defendants could then raise the standing issue at the close of plaintiffs case. The trial court also held that defendants could raise the issue of failure to mitigate damages at the conclusion of their case, but could not raise it as an affirmative defense because the defense was not timely filed.
At the close of plaintiffs case, defendants moved for a directed finding on all counts of plaintiffs complaint. The trial court granted defendants’ motion with respect to its claim of statutory fraud but reserved ruling on the issue of standing and reserved ruling on the motion with respect to the other counts of the complaint. At the end of trial, as noted, the trial court entered judgment in favor of defendants on all counts of plaintiffs complaint.
On appeal, plaintiff first argues that the trial court erred in rendering its verdict based upon plaintiffs lack of standing after it had ruled that defendants were barred from raising standing as an affirmative defense. Plaintiff claims that the trial court erroneously held that plaintiff was required to prove standing in its case in chief because lack of standing is an affirmative defense that is waived if not raised in a timely fashion. Plaintiff further argues that, even if the standing defense had been timely raised, plaintiff did have standing to bring its claims because none of plaintiffs claims could have been considered property of AMA Transport’s bankruptcy estate or of Phil Terese Transportation’s assignee.
In response, defendants argue that, in denying their motion for leave to add an affirmative defense concerning lack of standing, the trial court made no finding of prejudice to plaintiff and preserved the issue for later review. Defendants also argue that the trial court’s findings should be affirmed because plaintiffs claims are property of the estates of AMA Transport and Phil Terese Transportation and, therefore, may be raised only by the bankruptcy trustee and the assignee. Because plaintiff failed to show that the bankruptcy trustee and the assignee had abandoned those claims, plaintiff lacked standing to raise those claims.
We agree with plaintiff that the trial court erred in ruling that plaintiff was required to prove standing as part of its prima facie case. As noted by plaintiff, lack of standing is an affirmative defense that is waived if not raised in a timely fashion. Greer v. Illinois Housing Development Authority,
In ruling that plaintiff had no standing to bring its claim, the trial court relied on an opinion of the United States Court of Appeals for the Seventh Circuit, Koch Refining v. Farmers Union Central Exchange, Inc.,
As noted by the trial court, the seventh circuit in Koch Refining held that a bankruptcy trustee represents not only the rights of the debtor but also the interests of the creditors of the debtor. Koch Refining,
Following the decision in Koch Refining, this court in Aspling v. Ferrall,
Following the Aspling decision, the Illinois Supreme Court addressed the issue of whether a corporation may bring an alter ego action against its parent shareholder, thereby piercing its own corporate veil. In re Rehabilitation of Centaur Insurance Co.,
The Illinois Supreme Court then noted that the Koch Refining case relied on an interpretation of Illinois alter ego law that was not the law in Illinois. Centaur Insurance Co.,
Because the issue of standing presents a question of law, we review the trial court’s finding de novo. Anderson v. McHenry Township,
With regard to the substantive issues, plaintiff first argues that the trial court erred in finding that plaintiff had failed to prove its damages as required to recover on its breach of contract claims. Plaintiff contends that it proved its damages clearly and with specificity and that defendant was not entitled to a setoff against the money it owed. The breach of contract damages plaintiff claimed included $239,547.40 in unpaid invoices (including the invoices that had been written off), $36,443.10 in principal due under the $60,000 promissory note, plus 20% per annum in interest, and $100,000 in liquidated damages.
In rendering its verdict, the trial court noted that plaintiff’s comptroller, James Lynch, could not state why certain debts were written off, nor did he indicate that any credits were made for the resale or reletting of the trucks. The trial court stated that plaintiffs contract required a credit for funds received when there was a reletting or subsequent sale of repossessed trucks. Because plaintiff had failed to credit defendant for the funds received, the trial court found that it was unable to discern plaintiffs damages with reasonable certainty.
The rule that a trial court’s findings in a bench trial will not be disturbed unless manifestly erroneous applies equally to a trial court’s assessment of damages. Haudrich v. Howmedica, Inc.,
In finding that plaintiff had not proved damages on its breach of contract claims, the trial court relied on article 15 of plaintiffs lease. That article, entitled “Default By Customer and Remedies,” provides that in the event of a default plaintiff may take possession of the subject vehicles and may also require the customer to either purchase the vehicles or make an alternative payment as set forth in article 16 of plaintiffs lease. Article 15 of plaintiffs lease also provided:
“In the event that CUSTOMER shall fail to purchase the Vehicle (or, at RNL’s [plaintiffs] option, make the alternative payment), *** RNL may sell the Vehicle(s) at one (1) or more public or private sales, with or without notice to CUSTOMER ***. The proceeds of the sale, less RNL’s expenses ***, shall be applied to payment of any obligations due to RNL by CUSTOMER under this lease or otherwise. CUSTOMER shall remain liable for the balance due RNL under the preceding paragraph and for any deficiency in the balance of any sums due RNL under any other lease or indebtedness.”
Further, in the event plaintiff retained the vehicles because it could not or chose not to resell them, article 15 of the lease required plaintiff to credit the customer with the then net fair market value of the vehicles and to apply that net fair market value to the customer’s obligations under the lease.
As noted, rather than require defendants to purchase the subject vehicles, plaintiff sought the alternative payment set forth in article 16 of the lease. Article 16, entitled “Termination Privileges,” provided as follows:
“Upon termination by either party, CUSTOMER shall, at RNL’s option, purchase the Vehicle as to which the notice has been given ***. Alternatively, in lieu of purchasing the Vehicle, CUSTOMER may elect to pay RNL the difference, if any, between the purchase price as calculated in this Article and the Fair Market Value *** .”
Plaintiff argues that because it sought the alternative payment set forth in article 16, defendants were not entitled to any credit against their obligations under article 15. Plaintiff claims that the provisions in paragraph 15 relating to credits from the proceeds of a sale or for the net fair market value of the repossessed vehicles applied only when plaintiff required a customer to purchase the subject vehicles, not when plaintiff elected the alternative payment under article 16. In response, defendants argue that article 15 required plaintiff to credit defendants with the net sale proceeds or net fair market value of the trucks at issue in the lease even when the article 16 alternative payment was sought.
Both sides agree that articles 15 and 16 are at best poorly drafted. Those provisions were drafted by plaintiff. A contract is to be construed strictly against the drafter. Lake Bluff Heating & Air Conditioning Supply, Inc. v. Harris Trust & Savings Bank,
Absent any evidence concerning the number of trucks resold or leased, the proceeds from the resale or lease of those trucks, or the net fair market value of the retained vehicles, the trial court could not ascertain the damages that would place plaintiff in the position it would have been in had the contract been performed. Plaintiffs claim that it was owed $239,547.40 in unpaid invoices and $36,443.10 on its note was at best speculative and, given plaintiffs admission that it had not applied any credits toward defendants’ lease obligations, likely would have resulted in a windfall to plaintiff. Accordingly, the trial court correctly found that plaintiff had failed both to establish its damages on the unpaid invoices and note and to establish a reasonable basis for the computation of those damages.
We further find that plaintiff failed to establish that it was entitled to $100,000 in damages pursuant to the alternative damage formula set forth in article 16 of its lease. Article 16 of the lease explained the alternative payment as follows:
“[T]he difference, if any, between the purchase price as calculated in this Article and the Fair Market Value (defined as the highest appraisal of market value) (wholesale) received by RNL from two (2) or more independent vehicle dealers of each such vehicle as of the date of termination (the ‘alternative payment’). The purchase price of the Vehicle shall be the original agreed value of the Vehicle set forth in Schedule ‘A’ less the weekly depreciation credit of the Vehicle set forth in Schedule ‘A’ multiplied by the number of weeks elapsed from the in service date of the Vehicle to the termination date, provided, however, that the purchase price to be paid by the CUSTOMER for the Vehicle shall not be less than fifteen percent (15%) of its original agreed value set forth in Schedule ‘A’.”
In support of its claim for damages under this article, plaintiff produced an invoice to defendants that simply had two entries for premature cancellation of lease at $50,000 each. Dandrew testified that he performed the calculations to arrive at the $100,000 figure but did not testify concerning the numbers he used, nor did plaintiff offer into evidence any written calculations. Dandrew claimed that plaintiff lost $30,000 to $35,000 on the repossession, repair, and resale of the trucks subject to the note but offered no evidence to support his claim. Dandrew stated that plaintiff repossessed the trucks “and tried to add up the damages, the breach of the lease contract in which the lessee is to pay the difference between the wholesale value and the Schedule A’s value. And we sent [defendants] an invoice for all of that in a compiled amount of $100,000.” Dandrew later claimed that the vehicles were in such disrepair that plaintiff “never really got an iron clad wholesale value on the vehicles in their existing state.”
Based upon Dandrew’s testimony, the trial court could have concluded that plaintiff did not attempt to determine its damages under article 16 and instead simply estimated its damage figure. In fact, as noted by defendants, plaintiff did not establish the fair market value for the trucks, the original agreed value of the trucks, or the weekly depreciation credit of the trucks, as required pursuant to article 16 of plaintiff’s lease. Because plaintiff did not comply with the formula set forth in article 16 to determine its damages, we find that plaintiffs $100,000 damage claim also is speculative. We therefore agree with the trial court that plaintiff failed to establish that it sustained $100,000 in damages and that plaintiff failed to establish a reasonable basis for the computation of those damages. Consequently, we affirm the trial court’s verdict in favor of defendants on the ground that plaintiff did not prove the damage element of its breach of contract and tortious-interference-with-contract claims.
Plaintiff then argues that, even if defendants were entitled to a setoff under their lease, defendants waived that right when they failed to file a timely affirmative defense on the issue of mitigation and when defendants failed to present any evidence concerning the amount of setoff to which they were entitled. Plaintiff also claims that the trial court erred in ruling that defendants were entitled to a setoff after it had denied defendants’ leave to add an affirmative defense concerning mitigation of damages.
Plaintiff correctly notes that the failure to mitigate damages is an affirmative defense that must be pleaded and proved by a defendant in a breach of contract case. Illiana Machine & Manufacturing Corp. v. Dura-Chrome Corp.,
In contrast, it is arguable that the evidence concerning the leasing of the repossessed vehicles was improperly admitted because that evidence went to the issue of mitigation. Plaintiffs lease did not require plaintiff to attempt to lease the repossessed vehicles or to credit defendants with the proceeds of any subsequent leases. Even if such evidence was improperly admitted, however, we cannot say that the admission of that evidence prejudiced plaintiff or affected the outcome of the trial. In a case tried before the court without a jury, any error in admitting evidence is not grounds for reversal as long as there is sufficient evidence to support the judgment. Phillips v. Britton,
Because we affirm the trial court’s verdict in favor of defendants on the ground that plaintiff had failed to establish damages on its breach of contract claims, we need not address the plaintiffs claim that the trial court erred in finding that there was no breach of contract on its tortious-interference-with-contract claim and in finding that Frank DiLeonardi was not personally liable for the debts of AMA Transport, nor do we need to address defendants’ claim that the trial court erred in holding Michael Apa and Anthony Apa personally liable for Phil Terese Transportation’s debts.
For the foregoing reasons, the judgment of the circuit court of Du Page County is affirmed.
Affirmed.
